North’s Kaesong closure hits S Korean business deals

The closure of the Kaesong joint-industrial zone has begun to hit deals between South Korean manufacturers and foreign buyers, Yonhap reported yesterday.

An Indian company has scrapped a deal with South Korean auto parts maker Daewha Fuel Pump Industrial Ltd after it failed to deliver parts because of the suspension of operations, the agency said.

It is the first such move to be reported since the North blocked access to the Kaesong site on April 3 amid soaring military tensions on the Korean Peninsula.

The unidentified Indian company told Daewha it would switch to a US supplier, asked for equipment to be returned and demanded its investment to be repaid, Yonhap quoted Daewha official Choi Dong-hun as saying.

However, Choi said the impact would be minimal because Daewha’s deal with the Indian company accounted for less than 1 percent of its sales last year of 28 billion won (US$25 million).

On Friday, North Korea rejected a new request by businesspeople from the South to deliver food and supplies to their staff inside the closed industrial zone, which lies 10km inside the North.

South Koreans in the industrial zone were told they could leave when they wanted, but there were still 190 remaining early yesterday.